Intel's stock leapt over 22% in premarket trading on Friday after the chipmaker laid out a revenue projection that implied strong demand for the processing hardware required to run contemporary AI models. If that gain holds through the session's close, the shares would eclipse their dotcom-era high for the first time since 2000 and push valuation up by roughly $75.3 billion at an approximate share price of $81.
For years the company missed the early AI wave, unable to displace Nvidia's dominance in graphics processing units used for training large models and falling behind Taiwan Semiconductor Manufacturing Company in cutting-edge manufacturing. Still, the market for powerful central processing units - CPUs - for advanced AI systems is presenting Intel with a new opportunity.
Market reaction and analyst commentary
Bob O'Donnell, president and chief analyst at TECHnalysis Research, pointed to a shifting recognition of CPU roles in agentic AI workloads as a significant driver of renewed investor interest. He added that if Intel's foundry business begins contributing meaningfully in 2027 as expected, it would be an important signal that the company's turnaround is complete.
Investor sentiment around chipmakers more broadly rose on the news. Advanced Micro Devices increased about 7%, while U.S.-listed shares of TSMC gained roughly 3% as markets reacted to the stronger tone around semiconductor demand.
Management moves and government backing
CEO Lip-Bu Tan, installed after a period of strategic missteps that left Intel trailing in AI, has executed asset sales, workforce reductions and tighter cost controls. He also helped secure backing from the U.S. government and strategic partners, including SoftBank and Nvidia, to support Intel's manufacturing plans. Shares have nearly tripled since the Trump administration announced its stake in August.
Guidance, price targets and risks
On Thursday Intel forecast second-quarter revenue that exceeded Wall Street expectations. Following the results, at least 14 brokerages raised their price targets on the stock, according to LSEG data. Chief Financial Officer David Zinsner said part of the stronger forecast reflected higher chip prices but cautioned that execution risks in manufacturing could constrain how much of the market demand Intel ultimately captures.
HSBC analysts flagged rising demand for Intel's Xeon server CPUs, which are used in data-center workloads including AI inference, as a potential core element of the company's recovery.
Foundry momentum and the Tesla engagement
Intel received a high-profile validation of its contract manufacturing ambitions this week by securing Tesla as a customer for its upcoming 14A chipmaking process. The project ties to Elon Musk's planned Terafab AI chip complex. Zinsner declined to disclose the financial terms of the Tesla arrangement, saying those details remain under finalization.
Ryuta Makino, an analyst at Intel investor Gabelli Funds, described confirmation that Tesla plans to use Intel's 14A process as a "huge win" for the company's effort to build a contract manufacturing business that could eventually compete with TSMC.
Valuation snapshot
Intel was trading at a forward 12-month price-to-earnings multiple around 90 times - its highest on record - markedly above peers. By comparison, Advanced Micro Devices and Nvidia were last trading at forward multiples of 37.2 and 22.1 respectively.
Trading and tools
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Overall, the combination of a bullish revenue outlook, strategic management changes, government and partner support, and a notable foundry customer has driven renewed optimism about Intel's role in the AI hardware ecosystem. Management warnings about manufacturing execution risks and the need to capture demand amid competition remain key uncertainties.